Hello.
My new project required measuring very low AC voltages (2~5 mV) and AC currents.
Is there any transducer or circuitry available to detect such low voltages & currents and couple them with Arduino.
You will need an AC amplifier (about 500X) and a precision rectifier (both made from op amps) to measure such low AC voltages using an Arduino.
What is the expected current?
Will you be kind enough to explain the working of an AC Amplifier and that precision rectifier..
**I'm a Mechanical Engineer (by qualification) but i am willing to explore other fields also. 
So can you elaborate on the working principle so that i can arrange for the components.
Some photographs of the things you mentioned would be even more helpful.
Expected currents would be in Milli Amps..!!
You might find it more convenient to use a multi meter. If you need something Arduinio can do that they can't, plenty have data output that can surely be connected to an Arduino.